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HQ 733600

November 16, 1990

MAR-2-05 CO:R:C:V 733600 KG


Mr. Cary Weinberg
Leyden Customs Expediters, Inc.
99 Hudson Street
New York, N.Y. 10013-2896

RE: Country of origin marking of imported cloth napkins and tablecloths; substantial transformation; 19 CFR 12.130;

Dear Mr. Weinberg:

This is in response to your letter of June 11, 1990, requesting a country of origin ruling regarding imported cloth napkins and tablecloths.


Fabric will be manufactured in Country A and exported to Country B, both foreign countries, where the following processes will be performed: cutting to both width and length to make various sizes of napkins and tablecloths, and hemming on four sides. The finished items will be sent from Country B to the U.S.


Whether the cutting to both length and width and hemming of these imported products in Country B constitutes a substantial transformation.


Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article.

Section 12.130, Customs Regulations (19 CFR 12.130), sets forth the principles for making country of origin determinations for textile and textile products subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854)"("section

According to T.D. 85-38, published in the Federal Register on March 5, 1985, (50 FR 8714), which is the final rule document which established 19 CFR 12.130, the principles of country of origin for textiles and textile products contained in 19 CFR 12.130 are applicable to such merchandise for all purposes, including duty and marking. This regulation, which became effective in 1985, came about as a result of Executive Order No. 12,475, 49 FR 19955 (1984), which directed the Secretary of Treasury, in accordance with policy guidance provided by the Committee for the Implementation of Textile Agreements, to issue regulations governing the entry or withdrawal from warehouse for consumption of textile and textile products subject to section 204. The regulations were to include clarifications in or revisions to the country of origin rules for textiles and textile products subject to section 204 in order to avoid circumvention of multilateral and bilateral textile agreements.

Pursuant to 19 CFR 12.130, the standard of substantial transformation governs the determination of the country of origin where textiles and textile products are processed in more than one country. The country of origin of textile products is deemed to be that foreign territory, country, or insular possession where the article last underwent a substantial transformation. Substantial transformation is said to occur when the article has been transformed into a new and different article of commerce by means of substantial manufacturing or processing operations.

In T.D. 85-38 there is a discussion of how the examples and the factors enumerated in the regulation are intended to operate. "Examples set forth in 19 CFR 12.130(e) are intended to give guidance to Customs officers and other interested parties. Obviously, the examples represent clear factual situations where the country of origin of the imported merchandise is easily ascertainable. The examples are illustrative of how Customs, given a factual situation which fall within those examples, would rule after applying the criteria listed in 12.130(d). Any factual situation not squarely within those examples will be decided by Customs in accordance with the provisions of 12.130(b) and (d)." The factors to be applied in determining whether or not a manufacturing operation is substantial are set forth in 19 CFR 12.130(d).

Section 12.130(e)(1)(iv) states that a textile article will usually be a product of a particular country if the cutting of the fabric into parts and the assembly of those parts into the completed article has occurred in that country. However, 19 CFR 12.130(e)(2)(ii) states that a material will usually not be considered to be a product of a particular foreign country by virtue of merely having undergone cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commercial use. T.D. 85-38 explains that "where fabric which is readily identifiable as being intended for a particular commercial use (e.g., towelling or bed linen material) is merely cut to length or width, with the edges then being either hemmed or overlocked...the foreign territory or country which produced the fabric is the country of origin and not the country where the fabric was cut. 50 FR 8714. The phrase "readily identifiable as being intended for a particular commercial use" was interpreted by Customs in HQ 086779 (April 25, 1990), a ruling letter concerning diapers, to refer to evidence i.e., lines of demarcation or cutting marks that would indicate that the fabric was to be made into diapers.

Several recent cases have applied the principles of 19 CFR 12.130 to particular fact patterns that are similar to this case. Surgical towels which were cut to both length and width and hemmed on four sides, folded and packaged were considered not to be substantially transformed in HQ 733601 (July 26, 1990). Customs concluded in C.S.D. 90-29 (November 6, 1989), that greige terry towelling bleached, cut to size and hemmed, desized and dyed to be made into a beach towel in a second country was not substantially transformed. In HQ 083544 (February 28, 1990), Customs ruled that material cut to both length and width and hemmed to be made into kitchen towels and dishcloths in a second country was not substantially transformed because the processing operations performed in the second country were not substantial manufacturing or processing operations.

This case involves operations in the second country which are substantially the same as the processing in HQ 733601 and very similar to C.S.D. 90-29 and HQ 083544 which were held not to be a substantial transformation. Nothing presented in these facts would distinguish this case from C.S.D. 90-29 and HQ 083544 where the fabric was both cut to length and width from unmarked fabric and hemmed. Cutting fabric to both length and width and hemming to make a cloth napkin or tablecloth does not constitute a substantial manufacturing or processing operation. Because this prong of the substantial transformation test of 19 CFR 12.130 has not been satisfied, the fabric is not considered substantially transformed in the second country. The imported napkins and tablecloths would be considered a product of Country A for marking, duty and quota purposes.

Imported cloth napkins and tablecloths cut to both width and length and hemmed in Country B are not substantially transformed in Country B. These products would be considered a product of Country A for marking, duty and quota purposes.

The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 177.9(b)(1), Customs Regulations (19 CFR 177.9(b)(1)). This section states that a ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication is accurate and complete in every material respect. Should it subsequently be determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished this may affect the determination of country of origin. Accordingly, it is recommended that a new ruling request be submitted in accordance with section 177.2. Customs Regulations (19 CFR 177.2).


John Durant

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